Multi-Faceted Problems Stymie Resource Development

By Sothearith Im, VOA, Khmer
Original report from Washington
17 September 2009

[Editor’s note: VOA Khmer recently spoke with specialists in the field of natural resource management in developing countries and learned that Cambodia is not alone in struggling to use natural resources to benefit its citizens. The resource curse, where natural riches fail to help the poor, is a worldwide scourge, the global experts told VOA Khmer in numerous interviews. Below is the second part of a weekly series.]

Myriad factors lead to the abuse of natural resources, keeping their value out of the hands of everyday citizens, experts say. The absence of political will, of transparent management, of laws and regulations, and of capacity, and the existence of patronage systems, corruption, bureaucratic politics, abuse of power, and others, all add up to create problems.

The lack of transparent management of the resources in developing countries is not surprising, said Glen Matlack, an environmental professor at Ohio University. Governments sell concessions in the extractive industries, but the fees don’t serve the public good, and often these deals are made out of the public’s eye.

“Fairy typical of South American and Southeast Asian governments is that a concession is sold by the government to a working company or resource extraction company and the fees go to the government,” Matlack said. “It is often the problem because the receipt of the fees is controlled by the government. It has nothing to do with the region in which the resources are extracted. Rarely does the fee filter back to the people in the region, and it’s vulnerable to corruption.”

Paul Collier, an Oxford University economist and author of “The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It,” told VOA Khmer by phone that revenue generated from concessions must be funneled into government coffers, not to private businessmen.

It is the citizens who own the resources, he said, and the resources won’t last forever.

“The revenues get badly spent,” he said. “So instead of revenues being well spent on good investment, they are used for public consumption, and they become a battleground between politicians. I think in Bolivia, it exactly happens. It’s been a battleground, and the money is spent on public consumption instead of on investment.”

William Ascher, a professor of government and economics at Claremont Mckenna College, in California, and author of “Why Governments Waste Natural Resources: Policy Failures in Developing Countries,” said the common cause of the problem is a lack of clear jurisdiction or responsibility.

Rivalries grow within government agencies, which leads to greater exploitation of natural resources. Some governments create inter-ministerial groups, but members then fight for power and their own interests, he said.

“Each ministry, in order to do the job, typically would want to have more power, more jurisdiction, more resources,” Ascher told VOA Khmer by phone. “So there’s a built-in rivalry among ministries within the government, even though they’re all from the same party. Sometimes this can lead to bad policy if it is not clear who has jurisdiction over what aspect.”

Somit Varma, director of the World Bank’s oil, gas, mining, and chemicals department told VOA Khmer in an interview at his office in Washington that, among the many challenges facing developing countries, a lack of the capacity or skilled human resources is crucial. Many developing countries lack experienced, professional managers and the skilled human resources to actually do the job.

“One of the areas which is challenging is the capacity in the country to actually implement it,” Varma said. “And building capacity, we all in development business, we know this is very difficult. It takes years to build capacity. It’s not easy, but you need dedicated government on the other side.”

In many developing countries political patronage is practiced, in which national resources are used to reward individuals, groups, families or ethnicities for electoral support, as politicians use illegal gifts, fraudulently awarded appointments or government contracts.

This is also one of the major causes of natural resource mismanagement.

Some governments of developing countries acknowledge these problems, but some either do not realize them or ignore them, the experts said. Many are reluctant or do not have the political will to fix them, because the system for inequality of wealth distribution benefits a handful of decision-makers, family members and business associates.